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Divergent Expectations, R & D Expenditures and Technical Progress

Quirk, James P. and Terasawa, Katsuaki (1980) Divergent Expectations, R & D Expenditures and Technical Progress. Social Science Working Paper, 361. California Institute of Technology , Pasadena, CA.

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This paper deals with the problem of whether diversity of beliefs or consensus leads to a higher level of R and D spending in an industry, or a faster rate of technical progress, or a lower price for the industry's product. The answer depends upon characteristics of the demand function for industry output as well as the density functions reflecting probability beliefs of firm managers. Sufficient conditions are given for consensus (diversity) to ''pay'' in terms of R and D spending and/or the rate of technological progress, and R and D spending under market incentives is contrasted with an “optimal” level of R and D expenditures. The analysis is illustrated in more detail for the case of exponential density functions.

Item Type:Report or Paper (Working Paper)
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Alternate Title:Divergent Expectations and R & D Expenditures
Additional Information:This research was supported in part under a grant from the Department of Energy. We also wish to thank Forrest Nelson, Dave Grether, and Gib Bogle for their helpful comments, and Jeanne Wadsworth, and Leslie Fort for their typing of this paper. The intellectual stimulus for the paper comes from many conversations with Burt Klein concerning issues discussed in his recent work; but he should not be held responsible for the specifics of our model or our interpretation of the problem posed here. Published as Quirk, James, and Katsuaki Terasawa. "Divergent Expectations and R&D Expenditures," in Coal Models under Use in Government Planning, eds. Quirk, Janes P., Terasawa, K., and Whipple, David. Praeger Press, 1982.
Group:Social Science Working Papers
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Department of Energy (DOE)UNSPECIFIED
Series Name:Social Science Working Paper
Issue or Number:361
Record Number:CaltechAUTHORS:20171006-151341415
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82188
Deposited By: Jacquelyn Bussone
Deposited On:09 Oct 2017 22:39
Last Modified:03 Oct 2019 18:51

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